Primary makes its move for IPN

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Primary Healthcare last night launched a $39 million takeover bid for the shares in Independent Practitioner Network it does not own, marking a long-awaited deal to merge two of Australia's biggest consolidators of general practitioners.

The 5c-a-share bid comes as IPN was rumoured to be close to announcing a rights issue to erase its existing debt of roughly $14 million.

Primary, run by Dr Ed Bateman, still has to convince major shareholders in IPN, including 18.5 per cent holder, Sonic Healthcare.

However, Primary owns some pathology assets that analysts believe may be attractive to Sonic, which dominates Australia's pathology market.

Primary has been slowly accruing a stake in the past year, which analysts believe reflects the strategic value of the IPN business. IPN is said to control around 500 GPs.

IPN managing director Ralph Shreeve has acknowledged the possibility of a bid in recent weeks - he told staff on May 28 that he respected Dr Bateman and was pleased someone saw IPN's current share price as "a real opportunity to make a significant investment in the company".

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IPN closed at 4.8c, the bid having come after the close of sharemarket trading.

Primary yesterday morning lodged a notice lifting its stake from 18.9 per cent to 20 per cent as a result of recent buying, a level seemingly beyond the takeover threshold.

There have been whispers that Primary's doctors are not as happy as those at IPN despite being paid well.

Primary is thought to extract better productivity from its doctors (raising all the ire about the corporatisation of the profession) and Mr Shreeve also acknowledges in his letter that "there is an opportunity for IPN to learn how to achieve better asset utilisation and returns from a company like Primary Healthcare".